The Personal Information Economy 2015 conference is coming up! From the event page:
As a new digital age unfolds brands have a make-or-break strategic opportunity to place their customer relationships on a powerful new footing.
The opportunity: to work with customers to create new ‘Me2B’ services that empower them with data and help them use this data to meet previously unmet needs, such as making better decisions and organising and managing their lives better.
Brands that enable these new relationships and services are sustaining and deepening customer trust, growing revenue streams and profits, differentiating themselves in crowded markets, and positioning themselves strategically at the forefront of the digital economy.
Personal Information Economy 2015: Growth Through Trust
The rise of Me2B commerce
Event Venue: Kings Place, 90 York Way, London, N1 9AG
Event Date: Tuesday, December 8th 2015 from 09:00 to 19:00 (GMT)
More information here.
Post from 2009 reposted here to facilitate further discussion.
At the VRM workshop, we discussed the need for the concept of the Personal Data Store, what it would do in practice, and what that will ultimately enable.
Why we need such things – because individuals have a complex need to manage personal information over a lifetime, and the tools they have at their disposal today to do so are inadequate. Existing tools include the brain (which is good but does not have enough RAM, onboard storage, or an ethernet socket……thankfully), stand alone data stores (paper, spreadsheets, phones, which are good but not connected in secure ways that enable user-driven data aggregation and sharing), and supplier based data stores (which can be tactically good but are run under the supplier provided terms and conditions). NB Our current perception of ‘personal data stores’ is shaped by the good ones that are out their (e.g. my online bank, my online health vault); what we need is all of that functionality, and more – but working FOR ME.
What they will do/ enable – the term Personal Data Store is not an ideal term to describe a complex set of functions, but it is what it is until we get a better one (the analogy I’d use in more ways than one is the term ‘data warehouse’ – again a simplistic term that masks a lot of complex activity). A Personal Data Store can take two basic forms:
Operational Data Stores – that get things done, and only need store sufficient breadth and depth of data to fulfill the operation they are built for (e.g. pay a credit card bill, book a doctor’s appointment, order my groceries).
Analytical Data Stores – that underpin and enable decision making, and which typically need a more tightly defined, but much deeper data-set that includes data from a range of aspects of life rather than just that from one specific operation (e.g. plan a home move, buy a car, organise an overseas trip).
A sub-set of the individual’s overall data requirement will lie in both of the above, this being the data that then integrates decision-making and doing.
In both cases, the functionality required is to source, gather, manage, enhance and selectively disclose data (to presentation layers, interfaces or applications).
We also discussed ‘who has what data on you’ and introduced the following diagrams to explain current state and target state (post deployment of Volunteered Personal Information (VPI) tech and standards).
The key terms that require explanation are:
My Data – is the data that is undeniably within, and only within, the domain of an individual. It’s defining characteristic is that it has demonstrably not been made available to any other party under a signed, binding agreement. This space has been increasingly encroached upon by technology and organisations in recent history (e.g. behavioural tracking tools like Phorm) and this encroachment will continue. Indeed a general comment can be made that ‘my data’ equates to privacy in the context of personal data; so the rise of the surveillance society and state is a direct assault on ‘My Data’. Management of ‘My Data’ can be run by the individual themselves, or outsourced to a ‘fourth party service’.
Your Data – is the data that is undeniably within the domain of an organisation; either private, public or third sector. Proxy views of this data may exist elsewhere but are only that. This data would include, for example, the organisations own master records of their product/ service range, their pricing, their costs, their sales outlets and channels. Customer-facing views of much of Your Data is made available for reproduction in the ‘Our Data’ intersect.
Our Data – is the data that is jointly accessible to both buyer and seller/ service provider, and also potentially to any other parties to an interaction, transaction or relationship. It is the data that is generated through engaging in interactions and transactions in and around a customer/ supplier relationship. Despite being ‘our’ data, it is probably technically owned, or at least provided under terms of service designed by the seller/ service provider; in practical terms this also means that the seller/ service provider dictates the formats in which this data exists/ is made available.
Their Data – is the data built/ owned/ sold by third party data aggregators, e.g. credit bureaux, marketing data providers in all their forms. It’s defining characteristic is that it is only available/ accessible by buying/ licensing it from the owner.
Everybody’s Data – is the public domain data, typically developed/ run by large, public sector(ish) entities including local government (electoral roll), Post Offices (postal address files), mapping bureau (GIS). Typically this data is accessible under contract, but the barriers to accessing these contracts are set low – although often not low enough that an individual can engage with them easily.
The Basic Identifier Set/ Bit in the Middle – this is the core personal identity data which, like it or not, exists largely in the public domain – most typically (but not exclusively) as a result of electoral rolls being made available publicly, and specifically to service providers who wish to build things from them. This characteristic is that which enables the whole personal eco-system and its impact on data privacy to exist, with the individual as the un-knowing ‘point of integration’ for data about them.
The ovals in the venn diagram represent the static state, i.e. where does data live at a point in time. The flow arrows show where data flows to and from in this eco-system; I use red to signify data flowing under terms and conditions NOT controlled by the individual data subject.
Flow 1 (My Data to Your Data, and My Data to Our Data) – Individuals provide data to organisations under terms and conditions set by the organisation, the individual being offered a ‘take it or leave it’ set of options. Some granularity is often offered around choices for onward data sharing and use, i.e. the ‘tick boxes’ we all know and which are one of the main bitsof legacy CRM that VRM will fix.
Flow 2 (Your Data to Your Data, including Our Data) – Organisations share data with other organisations, usually through a back-channel, i.e. the details of the sharing relationship are typically not known to the data subject.
Flow 3 (Your Data, including Our Data to Their Data) – Organisations share data with a specific type of other organisation, data aggregators, under terms and conditions that enable onward sale. Typically the sharer is paid for this data/ has a stake in the re-sale value.
Flow 4 (Everybody’s Data to Their Data) – Data Aggregators use public domain data sources to initiate and extend their commercial data assets.
The target state is shown below, a different scenario altogether – and one which I believe will unfold incrementally over the next ten years or so…..data attribute by data attribute, customer/ supplier management process by customer/ supplier management process, industry sector by industry sector. In this scenario, the individual and ‘My Data’ becomes the dominant source of many valuable data types (e.g. buying intentions, verified changes of circumstance), and in doing so eliminates vast amounts of guesswork and waste from existing customer/ citizen managment processes.
The key new capabilities required to enable this to happen are those being worked on in the User Driven and Volunteered Personal Information work groups at Kantara (one tech group, one policy/ commerce one), and elsewhere within and around Project VRM. The new capabilities will consist of:
– personal data store(s), both operational and analytical
– data and technical standards around the sharing of volunteered personal information
– volunteered personal information sharing agreements (i.e. contracts driven by the individual perspective, creative commons-like icons for VPI sharing scenarios)
– audit and compliance mechanics
Around those capabilities, we will need to build a compelling story that clearly articulates, in a shared lexicon (thanks to Craig Burton for reminding us of the importance of this – watch this space), the benefits of the approach – for both individuals and organisations.
The target state that will emerge once these capabilities begin to impact will include the 4 additional individual-driven information flowsover and above the current ones. The defining characteristic of these new flows is that the can only be initiated by the data subject themselves, and most will only occur when the receiving entity has ’signed’ the terms and conditions asserted by the individual/ data subject. The new flows are:
Flow 5 (My Data to Your Data (inc Our Data) – Individuals will share more high value, volunteered information with their existing and potential suppliers, eliminating guesswork and waste from many customer management processes. In turn, organisations will share their own expertise/ data with individuals, adding value to the relationship.
Flow 6 (Everybody’s Data to My Data) – With their new, more sophisticated personal information management tools, individuals will be able to take direct feeds from public domain sources for use on their own mashups and applications (e.g. crime maps covering where I live/ travel)
Flow 7 (My Data to (someone else’s) My Data) – An enhanced version of ‘peer to peer’ information sharing.
Flow 8 (My Data to Their Data) – The (currently) unlikely concept of the individual making their volunteered information available to/ through the data aggregators. Indeed we are already starting to see the plumbing for this new flow being put in place with the launch of the Acxiom Identity Card.
The implications of the above are enormous, my projection being that over time some 80% of customer management processes will be driven from ‘My Data’. I’m pretty confident about that, a) because we are already see-ing the beginning of the change in the current rush for ‘user generated content’ (VPI without the contract), and b) because the economics will stack up. Organisation need data to run their operations – they don’t really mind where it comes from. So, if a new source emerges that is richer, deeper, more accurate, less toxic – and all at lower cost than existing sources; then organisations will use this source.
It won’t happen overnight obviously; as mentioned above specific tools, processes and commercial approaches need to emerge before this information begins to flow – and even then the shift will be slow but steady, probably beginning with Buying Intention data as it is the most obvious entry point with enough impact to trigger the change. That said, the Mydex social enterprise already has a working proof of concept up and running showing much of the above working. A technical write up of the proof of concept build can be found here. And the market implications of this are explored in more detail in new research on the market value of VPI shortly to be published by Alan Mitchell at Ctrl-Shift.
The two hour session at the VRM workshop was barely enough to scratch the surface of the above issues, so the plan is to continue the dialogue and begin specifying the capabilities required in detail in the User Driven and Volunteered Personal Information (technology) workgroup at The Kantara Initiative. The workgroup charter can be found here. A parallel workgroup focused on business and policy aspects will also be launched in the next few weeks. Anyone wishing to get involved in the workgroup can sign up to the mailing list hereand we’ll get started with the work in the next couple of weeks.
This is how the Internet looks to the online advertising business today:
This is how they approach it:
And this is the result:
What’s wrong with this view, and this approach, is the architectural assumption that:
- We are consumers and nothing more. Fish in a bowl.
- The Net — and the Web especially — is a container.
- Advertisers have a right to target us in that container. And to track us so we can be targeted.
- Negative externalities, such as data pollution, don’t matter.
- This can all be rationalized as an economic necessity.
Yet here is what remains true, regardless of the prevailing assumptions of the marketing world:
- We are not fish. Rather, as Cluetrain put it (in 1999!), we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it.
- The Net was designed as a wide open space where all the intelligence that matters is at its ends, and each of us sits (stands, walks, drives) at one.
- Even if advertisers have a legal right to target us, their manners are terrible and doomed for correction.
- Negative externalities matter. A lot. As Fred said in his talk, we eventually dealt with the pollution caused by industry, and we’ll deal with it in the virutal world as well.
- The larger economic necessity is for a well-functioning marketplace. We’ll get that online once free customers prove more valuable than captive ones.
The key is to replicate online the experience of operating as a free and independent customer in the physical world.
For example, when you go into a store, your default state is anonymity. Unless you are already known by name to the people at the store, you are nameless by default. This is a civic grace. There is no need to know everybody by name, and to do so might actually slow things down and make the world strange and creepy. (Ask anybody who has lived in a surveillance state, such as East Germany before it fell, what it is like to be followed, or to know you might be followed, all the time.) We haven’t yet invented ways to be anonymous online, or to control one’s anonymity. But that’s a challenge, isn’t it? Meaning it is also a market opportunity.
We’ve lived in a fishbowl long enough. Time to get human. I guarantee there’s a lot more money coming from human beings than from fish whose only utterances are clicks.
About the peak:
Worryingly, advertising is not well. Though companies supported by advertising still dominate the landscape and capture the popular imagination, cracks are beginning to appear in the very financial foundations of the web. Despite the best efforts of an industry, advertising is becoming less and less effective online. The once reliable fuel that powered a generation of innovations on the web is slowly, but perceptibly beginning to falter.
And the theory:
The theory of Peak Advertising relies on a simple proposition: online advertising will continuously decline in effectiveness going into the future, to the extent that it makes existing models unsustainable.This will, in turn, eventually force a broad transition in the financial models supporting the web. There are a few reasons to believe that this will be the case.
First, the changing demographics of web users do not favor advertising…
Second, ad blocking is increasingly ubiquitous…
Third, click fraud remains a severe and growing problem…
Finally, ever escalating advertising density may itself erode effectiveness.
The Theory of Peak Advertising is a working paper, so I’ll volunteer some additional sources.
First is Don Marti‘s corpus of writing about business, and advertising in particular. (For the latest, watch Part I and Part II of Don’s interview with Slashdot on “Why Targeted Ads Don’t Work.” There’s a transcript in Part II.)
Second is The Intention Economy: When Customers Take Charge (Harvard Business Review Press, 2012), which contains a chapter titled “The Advertising Bubble,” to which Don contributed some valuable research, digging deep into Harvard’s world-record-size collection of scholarly works. Here’s an excerpt:
The etymologist Douglas Harper calls mania “mental derangement characterized by excitement and delusion,” adding that it has been used in the “sense of ‘fad, craze’” since the 1680s and since the 1500s “as the second element in compounds expressing particular types of madness (cf. nymphomania, 1775; kleptomania, 1830; megalomania, 1890).”
We have that in advertising, so in a blog post I volunteered advertimania to Harper’s lexicon. Let’s unpack it here:
- An overly generous infusion of liquidity, in the form of venture capital. This capital is invested both in companies that expect to make money through advertising, and in advertising for those companies and others. This was rampant in the dot-com boom, and is again today.
- Faith in endless growth for advertising, and in its boundless capacity to fund free services to users.
- Herd mentality—around advertising itself, and in faith that “social” media, supported by advertising as a business model, will persist and grow indefinitely. (And the herd is large too.)
- Huge increase in trading. This is happening with user data bought and sold in back-end markets, employing the same kind of “quants” who worked on Wall Street during the housing bubble.
- Low quality of personal information, despite the claims of companies specializing in personalization.
And that’s just on advertising’s side of the Chinese wall. Over here on our side, we can add to that list (especially the last item) six delusions, inclusive of the ones listed above by Professor Clemmons:
- We are always ready to buy something. We’re not. In fact, most of the time we’re not about to buy anything. Even if we don’t mind being exposed to advertising when we’re not buying, nearly all of us do mind being watched constantly—especially by parties whose only interest is in selling us stuff.
- People will welcome totally personalized advertising. Even if people allowed themselves to be tracked constantly through the world, and to be understood in great detail (a privilege that advertisers have done nothing to earn) the result would still be guesswork, which is the very nature of advertising. For customers, rough impersonal guesswork is tolerable, because they’re used to it. Totally personalized guesswork is not. At least not by advertising. To become totally personal, advertising needs to cross an existential bridge, to become a different corporate function. It must become sales, without the human sound or the human touch.
- The market for tracking-based advertising is large enough to justify the huge investments being made in it. Christopher Meyer, founder of MonitorTalent and author of many books on market optimism (including Blur: The Speed of Change in the Connected Economy and Future Wealth, co-authored with Stanley M. Davis) says, “It’s a classic bubble. Investments in tracking-based advertising far exceed even the most optimistic projected returns. The whole business just won’t be that big. In fact the whole advertising category is starting to plateau.”
- Advertising is something people actually like, or can be made to like. It’s not. With a few all-too-rare exceptions (such as Superbowl ads, which are typical mostly of themselves), advertising is something people tolerate at best and loathe at worst. Improving a pain in the ass does not make it a kiss. Nor does putting a thumbs-up “like” button next to an ad that gets ignored 99.9 percent of the time—as happens with display ads on Facebook, for example. (It’s also worth noting that Facebook originally put thumbs-down symbols next to ads, but quickly got rid of them. It’s easy to guess why.)
- The client-server structure of e-commerce will persist unchanged. It won’t. We’ll explain why in the next chapter, meanwhile, here’s Phil Windley: “There are a billion commercial sites on the Web, each with its own selling systems, its own cookies, its own way of dealing with customers, and its own pile of data about each customer. This whole architecture will collapse as soon as customers have their own systems for dealing with sellers, their own piles of data, and their own contexts for interaction.”
- Companies have to advertise. In fact advertising is not an essential function of any company. The difference between an advertiser and an ordinary company is zero. Even if we call advertising an investment, it’s on the expense side of the balance sheet, and an easy item to cut.
Each of those delusions is a brick in the Chinese wall between the industry’s mentality and the larger marketplace outside of it. You could call that wall a blind side, but it’s more than that. It’s a screen on which an industry that smokes its own exhaust has long been projecting its fantasies. It sees those projections rather than the real human beings on the other side. It also fails to see what those human beings might bring to the market’s table, beyond cash, credit cards and coerced “loyalty.”
Tim and Adi are concerned about The Future of the Web (the second half of their title) because so much of what we frequent there is funded by advertising, which is getting to be post-peak:
The central importance of advertising to business online means that Peak Advertising will impact more than just media buyers and vendors. As the value of advertising inventory collapses, it will fundamentally change our experience of the web: everything from the diversity of services that we might choose from to our notions of privacy online will be affected.
One can imagine some breakthrough innovation that eliminates this problem wholesale and maintains the status quo. Someone might develop a behavioral targeting system that perfectly delivers compelling ads to the right customer flawlessly. The current failure to do so even with massive data about user behavior seems to discount this scenario.
In the alternative, someone might innovate an entirely different business that provides margins and revenue flow comparable or better than advertising. It is likely that such a transition would require significant changes in how we experience the web. Go with the models that we know: an Internet where the most massive companies ran on subscriptions, for example, would grow significantly slower, be more subject to user demands, and would likely feature smaller user bases than the ones that we see today. This avoids the obvious issue, too, that not all existing businesses would be able to transition successfully in time, particularly those that have built the most successful businesses on advertising.
We may very well reach and pass the point of Peak Advertising without any significant innovation emerging to maintain and grow the flow of revenue supporting the Internet. What will be left with is a stagnant and ever eroding flow of revenue from the primary sources of advertising, and the inadequate substitution of new forms of advertising in its place. Of the few players that remain, they will produce a web experience that engineers the erosion of user privacy and the blurring of the line between real content and advertising.
The future we end up with is partially a matter of technological innovation, but also a matter of human choice. To those designing platforms and using those platforms, the issue is: what kind of Internet do we want to have?
Ultimately, what Peak Advertising suggests is that the fundamental economics of the web increasingly force this consequential decision on all participants, user and platform alike.
The Intention Economy sees a consequential future in which we still have advertising, but in which more Net-aligned market interactions prevail — and out-perform what we have today with Web services and sites primarily funded by advertising:
Advertising may fund lots of stuff that we take for granted (such as Google’s search), but it flourishes in the absence of more efficient and direct demand-supply interactions. The Internet was built to facilitate exactly those kinds of interactions. This it has done since the mid-‘90s—but only within a billion different silos, each with its own system for interacting with users, and each with its own asymmetrical power relationship between seller and buyer. This system is old, broken and long overdue for a fix.
The Internet, meanwhile, has always been a symmetrical system. Its architecture, defined by its founding protocols (which we’ll visit in the Net Pains chapter) embodies “end-to-end” principles. Every end on the Net has equal status, whether that end is Amazon.com, the White House, your laptop or your phone. This architectural fact is a background against which advertising’s asymmetries, and its delusional assumptions, have always stood in sharp relief.
When the backlash is over, and the advertising bubble deflates, advertising will remain an enormous and useful business. We will still need advertising to do what only it can do. What will emerge, however, is a market for what advertising can’t do. This new market will be defined by what customers actually want, rather than guesses about it.
The Intention Economy also reports on work toward that future, fostered by ProjectVRM and allied work toward liberating customers and increasing their ability to engage, resulting in far more widespread and effective direct market interactions than advertising’s highly indirect Attention Economy can produce.
Since the book came out, the number and variety of VRM development projects, companies and infrastructural code bases has multiplied. It’s still early in their evolution, but their direction gets clearer every day.
Remember: the commercial Web is only eighteen years old. It is easy to assume, in these early years, that the first widespread business model is the only one. It’s not. Ecommerce itself is doing fine. Subscriptions are messy and silo’d, but showing signs of widespread normalization. And we’re starting to see signs that companies value service as much as sales, which opens a vast greenfield of new economic opportunities.
Most importantly, we — the customers — are just starting to liberate ourselves. When we finally do throw off the shackles, an abundance of new solutions will also show up: ones that will do far more than just patch cracks in the walls of online advertising’s castle.
Healthy markets depend on powerful customers, not just powerful companies. Both help each other. That didn’t happen much in the Attention Economy, which valued captive customers more than free ones. It will in the Intention Economy, which values free customers more than captive ones.
There’s an argument that goes like this:
- Companies are making money with personal data, and
- They are getting this data for free. Therefore,
- People should be able to make money with that data too.
This is not helpful framing, if we want to get full value out of our personal data. Or even to understand what the hell personal data is.
Stop and think about this for a second:
- Everything on your hard drives is personal data.
- So is every thing you own, if you bother to put it in the Internet of Your Things
- So is everything that comes into your life. For example, the pothole in the road in front of your house.
That data has far more use value than sale value. This use value is almost entirely untapped. Thinking about its sale value requires that you think the same way big companies do. This is as big a mistake in 2013 as it was —
- in 1980 to think about personal computing in terms of what big enterprises did with mainframes; and
- in 1993 to think about personal networking in terms of services provided by phone and cable companies.
In 1982 the IBM PC came along, and MS-DOS. And then the Macintosh in 1984. By 1985 there were tens of thousands of personal apps running on personal computers, doing far more than any company could do with its own computers, no matter how big those computers were. This turned out to be good for everybody, including the big companies with the big computers.
Likewise, in 1995 the Internet came along in a big way (ISPs, email, browsing, dial-up, e-commerce), and within months it was clear than anybody could network together with anybody else in the world at a cost that rounded to zero, and with a degree of freedom that was unimaginable within the systems controlled by phone and cable companies. (Eighteen years later, the phone and cable companies, with help from the copyright maximalists in Hollywood, are still trying to corral the Net’s horse back into the old barn.)
What companies are doing with your personal data today is all happening inside a B2B — Business-to-Business — context. That context is as limited as mainframe thinking in 1980 and telco/cableco thinking in 1993.
The other day in London we were talking with Nic Brisbourne about the massive quantity of opportunity and ready-to-spend money on the demand side of the marketplace — and the ironic absence (outside the still-small VRM world) of interest by developers in equipping demand to engage and drive supply. The market seem stuck inside the same old supply-driving-demand mentality. That’s what you hear coming from the mainframe-think world of Big Data mongering and analytics today.
Mind these words: Big Data talk today is as clueless about what people can do for themselves as mainframe talk was in 1980 and networking talk was in 1993. It’s big business-as-usual, in its big B2B bubble, talking itself into ever-ripening stages of vulnerability to massive disruption by the C’s of the world.
Speaking of which, we also met in Europe with Qiy, MesInfos, Midata, Intently, Mydex, Privowny and other VRM efforts (who will be insulted that I haven’t yet listed them here, but we can correct that). All of them are laying the groundwork required for unlocking the full use value of personal data — and not just its sale value, which is tiny at best anyway. Bravo for them, and for us as the beneficiaries of their good work.
This is Omie:
She is, literally, a clean slate. And she is your clean slate. Not Apple’s. Not Google’s. Not some phone company’s.
She can be what you want her to be, do what you want her to do, run whatever apps you want her to run, and use data you alone collect and control.
Being a clean slate makes Omie very different.
On your iPhone and iPad you can run only what Apple lets you run, and you can get only from Apple’s own store. On an Android phone you have to run Google’s pre-loaded apps, which means somebody is already not only telling you what you must do, but is following you as well.
Omie uses Android, but bows to Google only in respect of its intention to create an open Linux-based OS for mobile devices.
So Omie is yours, alone. Fully private, by design, from the start.
At Omie’s heart is your data, in your own personal cloud — not Google’s cloud or Apple’s cloud or Amazon’s cloud or the cloud of any other silo’d service.
Think of your personal cloud as a place for your stuff. Right now most of the data you use in the online marketplace — what should be your stuff — really isn’t. It’s out in clouds that aren’t yours: one for every Web site and service you deal with.
Consider your wallet — the one in your pocket or purse. That’s your wallet. Not Google’s or Paypal’s. Yet right now Google, Paypal and a dozen other companies think the wallet you carry online should be theirs. Wouldn’t it be better to carry all their wallets inside one that’s yours alone? Omie is desgned to make that possible, simply because she is yours alone.
Consider your shopping cart. Today that’s not even imaginable, because eevery shopping cart you’ve ever seen belongs to a company. Amazon, Ebay, Etsy, Walmart and the rest of them all have their own shopping carts for you. Why shouldn’t you have your own shopping cart, where you can see all the stuff you’ve almost-bought from all those online stores? With Omie you can at least imagine that, because Omie is yours. And imagining is the first step toward making.
So: what apps would you like Omie to run? Once we get the first few nailed down, we’ll crowdsource funding for developing both Omie and her first apps, or at least the specs for them.
To make that easy, here are just two requirements:
- Each app must be a kind that can only run on a device that is the owner’s alone. It can’t be one that only a corporate platform-owner (such as Google or Apple) can provide.
- Each app must rely first and foremost on data in the owner’s personal cloud.
The box we need to think outside of is the one that starts with a company. Here we’re starting with you.
Omie should be an instrument of control — by you. That’s why we’re stepping forward with it. Our job at Customer Commons is to stand on the side of the customer. That means we want apps that work for the customer first, and not just the seller. We need something solid to hold at our end of the demand chain — rather than, once again, to hold a device that serves as the far end of the supply chain’s whip.
We’ll bring up Omie at IIW. If you’re one of the 250 people here, come to the Omie session and let’s talk about where to go with the project. If you’re not here, put your thoughts and requests below.
A lot of big companies are eager to get their hands in your pockets — literally. They want your mobile phone to work as a digital wallet, and they want the digital wallet app you use to be theirs.
Naturally, this looks like it should be a big business — and to some degree it is already. But it also hasn’t met promotional expectations. This became clear a few days ago, when comScore released Digital Wallet Road Map 2013, a $4995 report on the digital wallet business. In a press release highlighting the report’s findings, Andrea Jacobs, comScore Payments Practice Leader, said “Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits.” Here’s how the release unpacks that:
The current digital wallet landscape remains fragmented among providers because of low consumer adoption outside of PayPal, with only 12 percent of consumers claiming to have used a digital wallet other than PayPal. However, study results indicated that the digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits.
Consumer Awareness and Usage of Digital Wallet Offerings
Source: comScore Digital Wallet Road Map 2013
Digital Wallet Percentage of Total Respondents Aware of Digital Wallet Percentage of Total Respondents Who Used the Digital Wallet PayPal 72% 48% Google Wallet 41% 8% MasterCard PayPass Wallet 13% 3% Square Wallet 8% 2% V.me by Visa 8% 2% ISIS 6% 1% Lemon Wallet 5% 1% LevelUp 5% 2%
One clear barrier to use of digital wallets is that the concept is often difficult to convey and prone to misinterpretation. Even after being asked to review the websites of particular digital wallets, respondents across all wallet brands still scored an average of just 45 percent in terms of demonstrated level of understanding.
Here’s the problem: wallets are personal. Even if you have a wallet with a brand name on it (say, Gucci or Fossil), it isn’t their wallet. It’s yours. What you keep in it, and how you use it, are none of their business. In fact, those companies would never think of making it their business, because all they’re providing you is a place to put your credit cards, your cash, or whatever other flat things you feel like carrying around in your pocket or purse.
So far, all the digital wallets out there are not yours. They belong to some company. You merely use the app. The wallet is their business, not yours. In this respect they aren’t much different than credit cards or various loyalty cards, which are things you put in your wallet; not the wallet itself. The wallet itself should be agnostic, if not oblivious, to what you put in there. It should be like a toolbox, where you can store lots of different tools, made by lots of different companies, made for serving different purposes.
All the digital wallet companies in comScore’s chart have isolated, proprietary and silo’d ways of providing payment benefits to users. Imagine buying a tool box from Sears that could only hold its own brand of tools, which would only work with devices from companies that were partners of Sears. That’s what we have with digital wallets so far. It’s the same problem we had with online systems (AOL, Compuserve, Prodigy, etc.) before the Internet came along. They were closed silos.
The Net works because it is a general purpose system. It isn’t run by any one company. Likewise, PCs are also general purpose systems. The company making them doesn’t insist that it only works with certain other partner companies. In that respect it’s open, just like the wallet in your pocket or purse. Smartphones, on the other hand, are general purpose to a more limited degree. Apple tells you what apps can and can’t run on your phone. Google makes sure some of its own apps (such as its wallet) run only on Android phones — or run better on Android than on Apple’s or other companies’ phones (as it did for years with Google maps for Apple).
Your personal cloud is your personal space, which you run for yourself in the networked world. In it you define the ways that your personal data interacts with the world of things, and of services from companies and other entities. That may sound complicated, but it’s actually no different than the personal space you call your house, your car, and your body. In fact, you can think of a personal cloud as something akin to all three, but in the networked world rather than in the physical one. For more on this read Phil Windley, starting here; and follow what Kuppinger-Cole says about Life Management Platforms (which I recently visited here).
So, to sum up, the main thing wrong with digital wallets today isn’t what they do. It’s that they are called “wallets.” Instead they should be called what they really are, which is payment services. (Yes, they do more, but the main thing they do is facilitate transactions.)
The notion that something so personal as a wallet should be provided for you, as a service, by a company, is typical of the calf-cow thinking that has dominated computing for the duration. There is nothing wrong with this, if it’s still 1995. But it’s now 2013, and it’s time we moved on. And, to do that, I’d like to see real digital wallets — personal ones — come up as a feature of personal clouds. So, let the conversation begin. Then the development.
Bonus link: Google’s Wallet and VRM.
While the history of computing and communications often appears to be one led by big entities in business and government, the biggest revolution has actually been a personal one. Each of us, as individuals, have acquired abilities that were once those of organizations alone — and have done far more with those abilities than the big players ever could — for those big players as well as for ourselves.
It started in the early ’80s, when the IBM PC became host to thousands of new applications for individuals. Personal computers suddenly proved to be a far more fertile ground for application development and new ueses than were the old corporate mainframes and minicomputers. Computing was no longer only about calculating and data processing. It was about everything one could imagine. The result was a profusion of new capabilities for individuals that also brought great benefits to organizations of all kinds and sizes.
A little more than a decade later, in the mid-’90s, the Internet did for communications what the PC did for computing. It gave individuals abilities that went far beyond those enjoyed by big organizations anywhere. Thanks to the Net, anybody could connect with anybody (or anything), anywhere in the world, using protocols that nobody owned, everybody could use, and anybody could improve. Even though there were many owned networks within the Internet, none governed the whole, and the result was a system that put every connected thing at zero functional distance from every other thing, at costs that could often be treated as zero. The positive economic and social externalities of the Internet today are beyond calculation. Again, as with PCs, this owes to new power in the hands of individuals that proved good for organizations as well.
Then in the late ’00s, smartphones and tablets put personal computing and communications advances — won by the PC and the Internet — into devices that fit in pockets and purses, running on platforms that invited millions of new applications. Once again, the increase in personal power and freedom proved essential to organizations as well. Initial resistance to BYOD (bring your own device) has ended, and companies now develop their own apps for employees and customers to use on their smartphones and tablets.
The upward trend in personal empowerment will move next to the “Internet of things,” as more of those objects and devices become equipped with computing and communication abilities — and as individuals gain the power to combine and program interactions between those things and the many services available through APIs ( application programming interfaces) and apps. Each of us will be able, either by ourselves or with the help of “fourth parties” (ones that work for us, as do brokers and banks) to control our identities, secure our privacy, and manage our many interactions in the world, without having to rely on any one platform, vendor or other enabling party. Far better economic signaling will move in both directions between demand and supply. Genuine, trusting and productive relationships will develop, and earned loyalty will prove far more useful than the coerced kind. In sum, the market will discover that free customers and citizens will prove more capable and productive than captive ones, and that this will be good for both business and society.
Progress in this direction will not be easy or even. All through the history just outlined, there have also been constant efforts to contain and limit what individuals can do with their computing and communications abilities. Large incumbent players have worked to create dependencies from which we cannot escape, and to resist competition in open markets. In spite of the many advances they have brought to the market’s table, phone and cable companies today still operate actual or virtual monopolies, and have been working from the start — aided by captive legislators and regulators — to subordinate the Internet’s boundless positive economic externalities to their own legacy business interests. Copyright and patent absolutists have also pushed successfully for laws and regulations that thwart or stop innovation and growth outside their own virtual castles.
And now, in many countries that value neither free markets nor free citizens, efforts are afoot to move Internet “governance” (an oxymoron from the angle of the Internet’s founding protocols) from organizations such as ICANN to the ITU (International Telecommunications Union, now part of the U.N.), where they can partition the Net along national lines, censor it (as in China today), and impose tariffs on data traffic across borders — enriching governments at great expense to economic growth and prosperity, and the welfare of citizens.
Yet the computing, communications and programming genies continue to do their magic for individuals and the organizations they comprise and support. Those genies will not go back in their old bottles. Thus the way to bet in the long run is on personal and economic freedom, and the general prosperity that arises from both. The only way to make that bet pay off, however, is to work on the side of individuals and the developers that empower them. That’s our job here at Customer Commons, and we invite you to join us in that work.
In Worth The Deal? Groceries Get A Personalized Price, Ashley Gross on NPR says,
Heather Kulper is one of those people who really wants to get a good deal. She’s a mom in a suburb north of Seattle who writes a blog about coupon clipping and saving money.
On a recent shopping trip to Safeway, Kulper pulls up a special Safeway app on her phone called Just For U. It shows her deeper discounts on products that she’s likely to buy based on her shopping history. The deals are lower than the club card discount listed in the aisle. When she checks out, she gets that personalized sale price.
“This is the artisan caramelized onion bread, which is normally $4.29. Priced with the Safeway club card, it’s $2.99,” Kulper says. “But with the Just For U personalized deal, it’s 99 cents.”
Kulper says it feels a little bit like she’s getting a secret deal.
It’s kind of like the old days, when you walked into a relative’s small grocery store, and they gave you the family discount. Except now, this is a big corporation using computers to calculate exactly your propensity to buy and at what price.
On this most recent trip, Kulper saved 41 percent with the Just for U app and coupons — $21 altogether — on her purchases. She says she’s happy with her discount, and she doesn’t mind that Safeway knows every tiny little detail of what groceries she buys. To Kulper, it’s worth it, as long as she can save money.
I can’t find Heather Kulper’s blog (the story doesn’t provide a link, and searches go mostly to the story), but it’s clear that she’s one kind of shopper: the aggressive bargain hunter. Is Safeway trying to turn all customers into full-time bargain hunters? Hard to say at this point, because it’s not clear whether a card-carrying Safeway customer is hunting for bargains, or simply forced to use the card to avoid paying the inflated “normal” price. It’s also not clear whether a personalized discount is any different than a coupon. The image above is one I shot of a Stop & Shop scanner, telling me about one in a series of discounts it offered me, based (presumably) on past purchases at the store.
Let’s think about about turning this around, to a system you control as a customer. You share your shopping list with the stores where you like to shop, and they come back with information about what they’ve got. Maybe they tell you they’ll give you a discounted price, or maybe they’ll tell you something is out of stock, or maybe they try to switch you to buying something else. In any of those cases you should also be able to tell them what you like or don’t like about what they’re telling you, and why. What matters in this alternative system is that the system is yours, not theirs. You take the lead, you control the information you share, and you aren’t trapped into many separate relationships, each with its own system for relating with you. In other words, it’s personal — by you —rather than personalized for you.
This is VRM, for Vendor Relationship Management. It’s how you run your relationships with many different companies, rather than how they run their relationships with many different customers. (Those are called CRM, for Customer Relationship Management, a many-$billion business.)